US-China tensions set to worsen as moderates lose out to hardliners – SCMP

Ross J Burland FXStreet

The South China Morning Post has picked up on the escalating tensions between the US and China.

In an article published over the weekend, it stated that:

US-China tensions set to worsen as moderates lose out to hardliners, observers say.

Chinese groups calling for more ‘fighting spirit’ are getting the upper hand on those who favour calm and cooperation, government adviser says.

Lead paragraphs

From Hong Kong to Covid-19, trade to the South China Sea, Beijing and Washington are clashing on a growing number of fronts and in an increasingly aggressive way.

Moderates who favour dialogue and cooperation as a way to resolve China’s disputes with the United States are losing ground to hardline groups bent on taking the fight to Washington, according to political insiders and observers.

“There are two camps in China,” said a former state official who now serves as a government adviser and asked not to be named.

“One is stressing the combat spirit, the other is trying to relieve tensions. And the former has the upper hand.”

Relations between China and the US are under intense pressure. After Beijing moved to introduce a national security law for Hong Kong, US President Donald Trump said on Friday that Washington would begin eliminating the special policy exemptions it grants the city, as it no longer considers it autonomous from mainland China.

Key notes

Market implications

This week will be very important for AUD while a whirlwind of geopolitical headlines are expected to run the show. For AUD/USD technical analysis, see here: Chart of the Day: AUD/USD is at make-or-break resistance, 0.6400 or 0.6820.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis

GBP/USD slips below key averages as geopolitical risks mount

GBP/USD fell about 0.35% on Tuesday, settling around 1.3350 after slipping below the 200-day Exponential Moving Average for the first time since early December. The pair has pulled back sharply from its late-January high near 1.3870, shedding over 500 pips in a series of lower highs and lower lows.

Gold falls to near $5,100 as inflation fears weigh amidst Middle East conflict

Gold price faces some selling pressure near $5,100 during the early Asian session on Wednesday. The precious metal falls amid a renewed US Dollar demand and dimming prospects for US rate cuts. The US ISM Services Purchasing Managers Index report will be published later on Wednesday.